Low Ranked Pennsylvania Won’t Be Helped With More Taxes

Low Ranked Pennsylvania Won’t Be Helped With More Taxes

By Leo Knepper

Pennsylvania has a lot of problems. In many rankings of the states, Pennsylvania is in the bottom ten. 24/7 Wall St, a business focused website, ranked Pennsylvania 42nd on its list of Best and Worst Run States. Being that close to the bottom places the Commonwealth squarely among the worst run states in the country. As if to prove that point, the General Assembly and Governor allowed a spending plan to become law without any clear way to make up $1.5 billion in revenue.

It is starting to become clear that the Governor, Senate Republican and Democratic leadership, and House Democratic leadership want to close the gap with higher taxes. The latest plan would have instituted a gross receipts tax on natural gas. House Republicans rightly walked away from this as a solution because it would have resulted in higher heating bills for Pennsylvanians next winter, and every winter going forward. House Republican leadership is not completely on the right track in closing the budget gap. Leadership in that chamber is content to engage in borrowing against future revenues to meet the shortfall.

As we noted in our blog last week, cutting spending has received far less attention than it should have for the sake of taxpayers. One of the more ambitious exceptions to that general rule is HB 1354, which would add work requirements to the welfare code as it relates to receiving medical assistance. It would also require medical assistance recipients who make over $250,000 to make copayments and engage in other cost sharing measures. (If you’re wondering why someone who is making over $250,000 is getting medical assistance, it has to do with automatic qualification for certain medical conditions.)

In our research, we found that nearly 60 percent of Pennsylvania families who were required to engage in job search activities or training for the federal “Temporary Assistance for Needy Families”(TANF) program participated in ZERO hours of qualified activities (see page 17). Although the qualifications for TANF are different than for medical assistance, the similarities of the populations made it a reasonable comparison. If a greater percentage of medical assistance recipients specifically, and welfare recipients in general, were required to engage in work search activities it could have a remarkable effect reducing the number of families needing assistance and a positive impact on Pennsylvania’s finances in the medium to long term.

In 2014, Maine required “able-bodied childless adults” (ABCAs) to work, train, or volunteer on a part-time basis to continue to qualify for food stamps. In two years the number of ABCAs receiving food stamps dropped by 90 percent. First, imagine the saving that taxpayers in Pennsylvania would reap if we instituted the same requirements. Second, imagine how that would benefit the states revenue collection. If all of those people who were currently receiving assistance that could work but weren’t, returned to the workforce it would be a long-term boon for Pennsylvania.

Senator Jake Corman (R-Centre) and other members of Senate Republican leadership have so far not publicly expressed any interest in enacting work requirements for medical assistance. If their position changes, we will let you know.